It's a very friendly and direct way to ask someone if they'd like to be friends.
To answer in the affirmative, you could say:
* Sí, me gustaría. (Yes, I would like to.)
* Sí, por supuesto. (Yes, of course.)
* Me encantaría. (I would love to.)
To decline politely, you could say:
* Gracias, pero no busco más amigos en este momento. (Thank you, but I'm not looking for more friends at the moment.)
* Prefiero mantener las cosas profesionales. (I prefer to keep things professional.)
* Gracias, pero no estoy interesado. (Thank you, but I'm not interested.)